Mexico's Femsa taps drug store market with YZA acquisition

Reuters Staff

3 Min Read

MEXICO CITY (Reuters) - Mexican retailer and beverage company Femsa said on Friday that its Femsa Comercio unit had agreed to buy a 75 percent stake in drug store chain YZA, marking its debut in a new business operation in its home turf.

No financial details were disclosed and the company was not immediately available for further comment. The deal is expected to close in the first quarter of 2013, pending regulatory approval.

YZA, founded in 1958 and headquartered in the colonial city of Merida in the state of Yucatan, has 333 stores across southern Mexico, Femsa (FMSAUBD.MX) said in a statement.

“This transaction opens a new avenue for growth for Femsa Comercio,” it added. Current YZA shareholders will keep the remaining 25 percent stake in the company. YZA executives were not immediately available for comment.

Femsa Comercio’s thriving growth over the last years piggybacked on the expansion of its successful Oxxo convenience stores, ending September with 10,167 units mostly in Mexico although it has a smaller operation in Colombia.

Monex analyst Paola Sotelo suggested Femsa could turn the YZA stores into Oxxos, adding drug distribution to the format. “The purchase is positive and in line with the company’s strategic expansion,” she said.

The YZA deal may be Femsa Comercio’s second expansion outside its core market in just a few weeks.

Local media reported last month that the unit had bought fast food franchiser Dona Tota for about $120 million but the company declined comment on what it called a market rumor.

Femsa sold its beer business to Heineken two years ago in exchange for a 20 percent stake in the Dutch brewer.

The company, which co-owns Coke bottler Coca-Cola Femsa (KOFL.MX) with Coca-Cola Co (KO.N), ended up 0.12 percent at 116.9 pesos on Friday just before making the YZA announcement.

Femsa posted last month a third-quarter profit rise of about 2 percent, with a big surge in sales crimped by exchange rate losses. Its New York-traded stock (FMX.N) ended near flat at $88.57.